A recent ruling by U.S. District Judge Paul Byron of the Middle District of Florida has made clear that the actual words used in an insurance contract matter. The court, in Mt. Hawley Insurance Co. v. Tactic Security Enforcement, Inc., No. 6:16-cv-01425 (M.D. FL. 2018), denied an insurance company’s motion for summary judgment attempting to rely on an exclusion to deny coverage to its policyholder.  The policyholder, Que Rico La Casa Del Mofongo, operated a restaurant establishment in Orlando, Florida, and sought coverage for two negligence lawsuits filed against it for allegedly failing to prevent a shooting and another violent incident on its premises.

The insurer denied coverage for the lawsuits citing to an exclusion barring coverage for bodily injury from “operations involving bars, taverns, lounges, gentlemen’s clubs and nightclubs.” However, the policy fails to define what those terms mean.  Even though the establishment had been referred to as a “lounge” and the parties agreed that it served alcohol, other evidence referred to it as a “restaurant.”  The court found that because the terms “bars,” taverns,” “lounges,” and “gentlemen’s clubs” were undefined, it was not possible to apply the exclusion to the facts to bar coverage.  Because the policy exclusion was “imprecise” and there remained an issue of material fact, the insurance company was not entitled to summary judgment on the application of the exclusion.

The decision shows the importance of looking closely at the actual policy language and making sure that it is sufficiently precise to apply to the claim at issue. Where, as here, the language is not sufficiently precise, the insurance company should not be able to rely on it to deny coverage. This decision is also a reminder that policyholders should read their policies closely to ensure there are no broad exclusions, such as the one here that could apply to bar coverage for injury arising out of the operations performed by the policyholder.

The case is Mt. Hawley Insurance Co. v. Tactic Security Enforcement, Inc., Case No 6:16-cv-01425 (M.D. Fla. 2018).  The decision can be found here.